On July 21, the U.S. Attorney’s Office and the U.S. Securities and Exchange Commission (SEC) has accused 3 Coinbase executives of Insider trading. As per the reports, these executives were using confidential information on future listings of the tokens for personal profits.
Criminal and Civil Charges have been filed against a former employee of Coinbase and 2 other men who were about to post confidential information which involved crypto assets on the Exchange. For the last 10 months, these men have been trading this information involving confidential reports on 14 listings and have made $1.5 million in illegal profits. They are hence, criminally accused of wire fraud and conspiracy.
SEC accuses Coinbase of Securities Fraud
Further, the most interesting aspect is that the SEC accused Coinbase of its involvement in securities fraud. As per SEC, Coinbase has listed at least nine of its assets as “securities.”
Coinbase’s Chief Legal Officer, Paul Grewal, takes a different approach. He gave a sharp and grave response to the U.S. Securities and Exchange Commission (SEC) in his blog post titled “Coinbase does not list securities. End of story”. He wrote:
“Seven of the nine assets included in the SEC’s charges are listed on Coinbase’s platform. None of these assets are securities. Coinbase has a rigorous process to analyze and review each digital asset before making it available on the Exchange — a process that the SEC itself reviews.”
Additionally, he gave an instance of CFTC Commissioner Caroline Pham, who quoted this to be a “striking” example of “regulation by enforcement” by the SEC.
The Department of Justice reviewed this case and stated Not to file fraud charges in this regard while SEC was claiming these 9 assets to be “securities.” According to Coinbase, it views all this as baseless as the SEC’s securities fraud charges are immaterial.
Impulsive SEC faces backlash
Coinbase has accused the SEC of directly jumping to litigation regarding the securities issue. However, the platform clarified that it was ready to cooperate on the matter of insider trading.
As per Coinbase, SEC running to file these baseless securities fraud charges puts a clear light on this point that the US does not have clear regulatory frameworks for digital asset securities.
Grewal further added: :
“Instead of crafting tailored rules inclusively and transparently, the SEC is relying on these types of one-off enforcement actions to try to bring all digital assets into its jurisdiction, even those assets that are not securities.”